Guarantees for transport infrastructure cash-flow (LGTT)

The high levels of revenue risk in the early stages of public-private-partnership transport projects can cause difficulties attracting private sector funding. We work to overcome concerns that traffic-dependent revenue (tolls, fares etc.) may not reach medium term targets. The Loan Guarantee Instrument for Trans-European Transport Network Projects (LGTT) can partially cover risks for projects or part-projects that are deemed of common interest (as defined in Decision No 1692/96/EC) and receive income from user-charges.

The LGTT normally guarantees a maximum of 10% of senior debt (20% in exceptional instances) up to a maximum of EUR 200m per project, following EIB Structured Finance Facility rules. Once the EIB has become a creditor, amounts due under the LGTT will rank junior to other debt. This support substantially enhances credit quality, thereby encouraging a reduction of risk margins applied to senior project loans. These savings should surpass the cost of the guarantee to the borrower. This support is available for as much as five to seven years after project completion. The EIB and European Commission have jointly contributed EUR 1bn in capital which could support up to
EUR 20bn of senior loans.

Publications

An innovative financial instrument set up and developed jointly by the European Commission and the European Investment Bank (EIB) which aims at facilitating a larger participation of the private sector involvement in the financing of Trans-European Transport Network infrastructure (“TEN-T”).